By Ievgen Vorobiov of PISM
Three months of the Russia-led proxy war in Ukraine have claimed the lives of hundreds of Ukrainian servicemen and civilians. Until now, Western media have lazily ignored the complexity of the security crisis, while public opinion in the West has had more pressing concerns than an unfolding war on the edge of the European Union. EU politicians have had an easy ride in pretending to handle it.
But the downing of flight MH17 by pro-Russian militants is slowly changing perceptions in the West. It is still a war in a “faraway nation” but now with a dramatic number of foreign civilian casualties. If you had told a western European diplomat two weeks ago that EU citizens would be the next victims of Russia’s slowly-unfolding massacre in Ukraine, they would have dismissed you as paranoid and manipulative. Not any more. Continue reading »
As Narendra Modi, India’s new prime minister, gets his feet under his desk in New Delhi, it seems everyone is optimistic about the country’s prospects. That includes Ravneet Gill, chief executive of Deutsche Bank in India.
Modi won this year’s election with a powerful majority, having promised to restart India’s manufacturing sector, to get investment going by cutting red tape, and to improve the country’s crumbling infrastructure. Gill says all this will help India’s struggling banking sector – but running a bank in the country still isn’t an easy job. Continue reading »
** FT News **
* Russia’s central bank lifts key rate to 8% | Russia’s central bank unexpectedly lifted its key benchmark interest rate to 8 per cent, citing the impact of heightened geopolitical tensions on inflation risk.
* West Bank erupts in anti-Israel protests | Israel’s military had no immediate comment on the shelling attack on the school, which brought the total death toll in Gaza to nearly 750 Continue reading »
We’ve written recently about the scarcity of liquidity on EM secondary markets caused by regulatory changes and loose monetary policies in developed economies since the crisis of 2008-09. We’ve noted that those developments have also delivered abundant liquidity on primary markets, where bonds and equities are first issued (unlike secondary markets, where they are subsequently traded).
Flush with cash and hungry for yield, many investors have snapped up emerging market bonds and other assets they might well have sniffed at in more ‘normal’ times. Some analysts worry that this is driving a bubble. It may also be causing a related phenomenon: a breakdown in the correlation between risk and reward. If that is confirmed, a lot of EM investors face a nasty surprise. Continue reading »
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** FT News **
* Israel shells UN school used as a shelter | Israel’s military had no immediate comment on the shelling attack on the school, which brought the total death toll in Gaza to nearly 750
* US says Russia fired artillery at Ukraine | Yatseniuk rebukes parliament for betraying revolution, while EU ambassadors reach no conclusion on widening sanctions against Russia Continue reading »
More glum news for Mexico’s economy, which has been growing at turtle speed this year. Growth in May came in below expectations – again.
According to the state statistics office, growth in May was a disappointing 1.4 per cent, below market forecasts for nearer 2 per cent. Continue reading »
Hungary’s government said on Thursday it had agreed a deal to buy MKB, one of the country’s largest commercial banks with more than 80 branches, from BayernLB, its German owner. The state will pay €55m for MKB and BayernLB will waive claims of €270m in receivables.
The deal marks what Mihaly Varga, Hungary’s economy minister, said was “the first step” in increasing Hungarian ownership of the country’s commercial banks. Viktor Orban, prime minister, has long insisted that he wants to see “at least” 50 per cent of the Hungarian banking system in domestic hands. Continue reading »
And it's goodbye from him
Bulgaria’s battered and unloved government formally resigned on July 24, its reputation shaken by its policies and alleged murky business links – and, more recently, a banking crisis. With snap elections looming in October, a caretaker government will now seek to steady the ship and repair relations with the European Union. The election is expected to usher in the nominally rightist opposition with the hope it will take a more reform-minded and western-looking approach. Continue reading »
There has been an outpouring of bitter comments under the hashtag #GuisoChino – “Chinese Stew”, slang for fraud and corruption – in Venezuela sparked by this week’s visit by Chinese president Xi Jinping, who granted more financial support to the cratering economy of president Nicolás Maduro.
China has granted some $50bn in loans to Venezuela in recent years according to the Inter-American Dialogue/Boston University China-Latin America Finance Database, far more than to any other country in the region. Venezuela, after all, has the world’s biggest oil reserves. Continue reading »
Investors could be forgiven for being confused by the signals coming out of Turkey’s central bank on Thursday.
Governor Erdem Başçi (pictured) suggested that rate cuts were likely to continue. Speaking at a press conference in Ankara, he said the markets were pricing in a cut in the key policy rate of about 50 basis points and that any further interest rate cuts would be “measured”. Continue reading »
Emirates NBD, Dubai’s biggest bank, reported a 30 per cent increase in net profit in the first half as the emirate’s economy grows amid regional unrest.
But its main shareholder, the indebted Dubai government, continues to raid its piggy bank. In the past six months, Dubai borrowed an extra Dh7bn from the lender, in which it holds a 55.6 per cent stake, extending its overdraft to Dh98.6bn ($26.8bn.) Continue reading »
By Mat Youkee of UK Colombia Trade
Colombia’s oil and gas industry – the key driver of the country’s growth over the last decade – is stuttering. In 2012 it reached its goal of producing 1m barrels per day, up from 600,000 bpd in 2008. But in 2014 attacks by insurgents on a key pipeline hit production figures and delays in obtaining drilling permits have prevented the development of new projects.
Most worryingly for the long-term health of the industry, however, has been a lack of major new discoveries. A handful of junior firms have made significant finds but much of the recent growth in production has been the result of optimizing previously discovered deposits, either by bringing online marginal fields or by boosting recovery rates through the application of new technology. At current production levels, the country’s 2.4bn barrels of proven reserves will last less than seven years. Continue reading »
** FT News **
* EU to weigh extensive sanctions on Russia | Proposal includes ban on buying new debt or stock of Russia’s largest banks and from listing new shares on European exchanges
* Emerging markets slowdown hurts Unilever | Maker of Lipton tea and Dove soap reports bigger than expected drop in first-half sales as weakening currencies wipe €413m off operating profits Continue reading »
Who will jump first in Argentina’s game of chicken with its holdout creditors as they race towards the abyss of sovereign debt default? Or will both drive off the edge?
Although just a few days remain until Argentina’s July 30 deadline to make bond interest payments – a failure to do so would result in default – it is still possible that one of the two parties will make a last-minute concession that would allow a deal to be made. Indeed, if a compromise is made, it is most likely to come at the eleventh hour. Continue reading »
** FT News **
* Fears rise of Russia-fuelled arms race | Downing of Kiev fighter jets adds to suspicions among western intelligence officials who point to an extensive weapons-smuggling operation
* Why Slim’s three-day week is a great idea | A shorter week would work for many others if their companies have the imagination to agree to it Continue reading »